China Evergrande cancels land deal for US$818 million refund to overcome liquidity crisis, end grandiose football stadium plan
- Distressed developer seeks a 5.52 billion yuan refund by returning land-use rights to four parcels of land in Guangzhou
- Evergrande sunk 2.1 billion yuan in cost to build the world’s biggest football stadium before it ran out of cash amid bond defaults
The embattled developer will return land-use rights on four parcels of land totalling 499,113 square metres to the Guangzhou municipal government for a 5.52 billion yuan (US$818 million) refund, according to a stock exchange filing late Thursday. It paid 6.813 billion yuan for the rights in April 2020.
“The group’s liquidity issue has adversely affected the development of and construction on the land,” Evergrande said. The decision is fair and reasonable and is in the best interest of the company, it added.
The developer is racing against time to fend off hostile creditors, including holders of about US$20 billion worth of offshore bonds following a default in late December. It disappointed investors last month when a restructuring plan failed to offer details on how it will repay some of its US$300 billion of liabilities.
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Chinese football club invests US$1.7 billion to build one of the world’s biggest soccer stadiums
The April 2020 contract allowed Evergrande to build and sell homes, as well as develop commercial and sports facilities for a term of 40 years, and allowed business uses for 50 years.
Founder and chairman Hui Ka-yan envisioned a lotus-shaped 100,000-capacity stadium at a cost of 12 billion yuan, a size surpassing Europe’s biggest at Camp Nou in Barcelona, Spain. Evergrande sunk 2.1 billion in construction costs into the stadium project until it was was halted as the developer ran out of cash.